The Québec Mining Scene
A jurisdiction fit to take on the energy transition
In the course of their history, some provinces will find themselves at turning points. Almost as if a complex web of circumstances (and elements across the periodic table) brought them to a particular moment that would make the balance tilt in their favor, providing generational-type opportunities. This is where Québec’s mining industry stands in 2023. Québec is, of course, a regular contender for the top spots amongst the Fraser Institute’s Annual Survey of Mining Companies, and the province remains one of the most attractive for investments in the world. In light of the green transition and the growing need for minerals, Québec’s mining industry can step up to another level. NAICS, the Canadian statistics agency, stated: “Québec employs 10% of Canada’s mining workforce (around 24,000 people) and looking at 2024, the employment outlook for the mining sector is stronger than for all industries in the province.”
What has changed in recent months is a perfect storm of foreign investment (at levels unseen for a decade), strong commodity prices, and – perhaps one of the main stories going forward – public incentives to develop the industry’s critical minerals value chain. First released in 2020, the ‘Québec Plan for the Development of Critical and Strategic Minerals’ really started making strides in recent months, and along with the updated federal ‘Canadian Critical Minerals Strategy’ of December 2022, shows government intent at both federal and provincial levels to make Québec a leader in sustainable, forward-looking mining. As put by Maïté Blanchette Vézina, Minister of Natural Resources and Forest, Québec Government: “Québec is in the right place at the right time. Our action plans are clear, and we are a key player on the international scene. People want ethical mining, and that is what Québec offers.”
All eyes on La Belle Province
Besides their food and French heritage, Québécois people take pride in their resilience. The latter has been tested since May 2023, when the biggest fire in the province’s history broke out in the North. The blaze, which covered an area of more than a million hectares – the size of Jamaica – even forced the residents of Radisson in James Bay to evacuate in late July. Over the summer, the fires halted operations at Windfall, the JV between Gold Fields and Osisko Mining, along with Brunswick’s exploration progress in James Bay, and even Hecla’s Casa Berardi mine. Exogenous events impact, but do not change long-term dynamics.
Short-term setbacks have not deterred foreign investment into the industry. A predictable legal framework, an advantageous tax system, a skilled workforce, and a robust infrastructure all make for an enticing investment case for Québec. Amongst a flurry of Australian juniors, producers, and investors, 2022/2023 also marked the arrival of South African giant Gold Fields in the Abitibi, along with a US$455 million investment by the Swiss Glencore into its Raglan mine. As put by Claude Bélanger, COO Copper North America and Philippines at Glencore: “We are making significant investments in our copper assets in Québec, and we look forward to increasing our recycling capabilities there.”
The Québécois authorities and players however do not succumb to the delusions of grandeur. The province’s exceptional resource potential must benefit the circular economy and the province, first. In an increasingly tense geopolitical environment, the government – in an apparent crackdown on Chinese foreign investment, particularly directed towards Canada’s prized lithium – suggested in 2022 bolstering the Investment Canada Act to essentially allow ministers to block critical minerals investment if they believe such deals threaten national security. Pathing the way for foreign investment at Ressources Québec, Jean-Francois Béland gave his take on the global climate: “Due to geopolitical reasons such as the Russia-Ukraine conflict and political turmoil with China, local and foreign companies are rather looking towards securing a supply chain in North America and Québec.”
"Québec is the epicenter of the future of the battery metals supply chain for the world, and we have a front-row seat in seeing that transition unfold."
Carlo De Girolamo, Head of Private Capital Advisory and Restructuring, Desjardins
Taking on the world’s needs
Québec is ideally placed to serve the growing electrification needs of North America. Among Canadian provinces, Québec ranked first for iron, nickel, and graphite, second for gold, and third for copper, for a total of over C$10 billion in shipment value. The province develops over 30 commodities, making it the most diverse resource base in Canada. Looking down the line, from the ground to the vehicle, Québec’s role is better understood through concrete figures: “In terms of production capacity, it is forecasted that by 2030, 20 to 40% of EVs produced in North America will have a piece provided by Québec,” according to Kirsty Liddicoat, COO of Northern Graphite – the only producer of graphite in North America through its Lac des Iles mine in Québec. “The province has shown itself to have the political will to champion the success of the energy transition,” she continued.
The province has the resources to feed critical minerals-starved global markets, and 2023 is the year where all stakeholders determined a vision for Québec to be the epicenter of a whole value chain. Rather than relying on an extraction-based model, recent months saw critical minerals recycling, processing, and batter-making plants proposed. The reshoring of downstream capabilities was highlighted notably by General Motors’ new US$600 million electric-vehicle battery component plant financing in Bécancour, Québec. Desjardin, one of Canada’s largest financial institutions, assisted with Sayona’s North American Lithium operations and has a key responsibility in supporting the best upstream and downstream strategic projects. As shared by Carlo De Girolamo, managing director, head of private capital advisory and restructuring: “Québec is the epicenter of the future of the battery metals supply chain for the world.”
This vision was shared by Louis-Nicolas Boulanger, partner at McCarthy-Tétrault (and who acted as Sayona’s legal council): “There is a strong desire to push North America as one of the main contributors of critical minerals in the world, and issues such as political conflict with China and the Russia-Ukraine situation creates an extremely beneficial environment for Québec to contribute on the worldwide scene.”
The ongoing lithium frenzy has, momentarily, relegated many of the province’s exciting gold stories to the second row. With gold having stabilized at almost US$2,000/oz since April 2023, players trading the king of commodities have felt let down by the market. Amidst decreasing gold production, the industry will likely be headed towards a virtuous cycle for investment, particularly given macroeconomic fundamentals. In conversations with developers such as Troilus Gold, O3 Mining, and Osisko Mining, the harsh outlook of a weakening dollar-centered economy justified the case for stronger gold demand, and the role of Québec in feeding the market – the Abitibi Greenstone Belt still contains over 300 million oz/Au including production, measured and indicated reserves and resources. José Vizquerra, President and CEO of O3 Mining shared: “Banks have limited amounts of cash, so the only way to push the economy is by reducing interest rates, and every time that happens, gold prices go up. Interest rates will come down. The question is when?“
Going South
Québec’s mining story has, for almost 150 years, been written in the North. To this day, more than 90% of mining investments are made in the Nord-du-Québec, Abitibi-Témiscamingue, and Côte-Nord regions. Namely, the “La Grande Alliance” partnership between industries and the Cree First Nations, and the historical Plan Nord, all initiatives have contributed to the socio-economic prosperity of some of the most remote areas in the world north of the 49th parallel. As put by David Christie, president and CEO of Orford Mining, who holds multi-commodity exploration projects in Nunavik, above the 55th parallel: “Québec institutions tell you whom to contact as far as the local communities are concerned. They settled the land claims for the First Nations and Cree Nations a long time ago, and this significantly helped development in the Québec North.”
Yet, one of the main stories unfolding in Québec is the push south for the province’s potential economically viable critical minerals deposits and huge graphite reserves. In other words, the coming months are likely to resemble a balancing act, whereby the industry will try to convey the message – to a population that is not used to mining – that a claim is not a mine, and that one cannot choose where Mother Earth distributes minerals under its crust. As put by Fasken’s Frank Mariage, partner: “The green transition will come at a price, and we cannot pick and choose where deposits form. Sometimes they will be south of the 49th Parallel. There still is a NIMBY (not in my backward) dilemma.”
Disputed land claims and uncertainty regarding protected areas were some of the main reasons behind Québec’s stumble from the fifth best jurisdiction to the eighth in the Fraser Institute in 2022. The adoption of the Québec plan to develop critical minerals attracted juniors to the south of the province, leading to a drastic increase in claims in the area. Claims in the southern areas of Estrie, Bas Saint-Laurent, and Gaspésie increased by 100% in two years, particularly related to copper, zinc, gold, and graphite projects. Dialogue, to reassure all stakeholders – the local population, shareholders, and potential investors – will be the watchword as we head into 2024. In recent months, many local coalitions formed in Québec, deploring the idea of southern Québec becoming “an open cast mine”. Yet, as reminded by Josée Méthot, president and CEO of the Québec Mining Association (QMA): “Last year, there were over 250,000 active claims in Québec, and less than 1% had real exploration works with heavy machinery.”
More mining will have to unfold for the green transition to happen to realize the ambitious net-zero targets in the coming decades. Society is left with a choice of leaving the job to neighboring countries, whose sustainable, social, and environmental practices are questionable, or to give itself tools to mine responsibly at home. The Québec Mineral Exploration Association assists early-stage developers in their quest for minerals, and president and CEO Olivier Grondin argued that there is no better place than Québec to find tomorrow’s resources: “Everybody wants electrification, and we need to convey that sustainable mining for critical minerals is the biggest part of this transition, and one of the best places in the world to do it is in Québec.”
The time is now for Québec. Across the mining value chain, across the periodic table, all elements align and point towards the province’s growing importance on the global mining scene. The following pages will analyze what makes Québec’s mining jurisdiction unique: from hosting the largest players in the gold space, boasting a new capital for lithium in North America, and critical minerals endowment, while paying special attention to the backbone of the industry, the service providers and equipment firms racking their brains to bolster innovation. In the words of Josée Méthot: “The mining industry is in a great spot now. Québec is in a great position to become a mining jurisdiction capable of producing the necessary minerals for decarbonization.”
Image courtesy of Eldorado Gold